MAKE expects more than 55GW of wind power capacity to be commissioned in North America from 2015 to 2024. Policy-driven growth in the near term will subside, and LCOE and economic drivers will become increasingly important.
In the US, the expired federal PTC underpins 13.4GW of growth in 2015 and 2016, preceding policy uncertainty and a 77% downturn YoY in 2017. Demand from state renewable electricity standards (RES), the EPA’s Clean Power Plan, and anticipated coal plant retirements will offer moderate sources of demand in later years of the outlook.
The declining LCOE of wind power will facilitate growth in both the US and Canada. Wind’s LCOE is quickly approaching grid parity, especially in the US. Competitive LCOEs will encourage more commercial and industrial PPAs, and windpower will be increasingly deployed as a merchant asset in the near term.
Although prices of oil and gas have fallen recently, MAKE expects that the risk of volatility in natural gas prices will continue to drive demand for wind power as a hedge resource. In Canada, MAKE forecasts the wind industry will commission nearly 4GW of wind capacity from 2015 to 2017, but this level of growth will not be sustained. The next three years account for 47% of the entire 10-year outlook, and in 2018 growth in Canada will be cut in half from the 1.6GW that MAKE expects in 2015. Growth in Canada will continue to diminish due to sluggish growth in electricity demand and competition from hydropower, natural gas power, and nuclear fleet refurbishments.
MAKE’s three scenarios (bull, base, and bear) diverge in each market and reveal significant potential upsides and downsides from key drivers and barriers. MAKE’s US bull case forecasts that a potential PTC phase-out would bolster roughly 13GW of upside through 2020. As multiple states consider proposals to strengthen their RES mandates, the bull case also projects nearly 10GW of additional demand for wind is possible from expanded RES targets through 2024. On the other hand, the bear cases incorporate opposition to RES in the US and unmet renewable targets in Canada as well as subdued natural gas prices and electricity demand for the region. The bear assumptions reduce the 10-year wind power outlook by 41% in the US and 33% in Canada.